Could someone please tell people how 401Ks work? Allthat money you thought you had? You get that only if you sell off the funds. Stock markets go up and down. Maybe you should look at how you are invested. And finally, even with a decrease, if inflation is under control, that money will go farther.
Which was the lesson people learned in 2001 and in 2008, not to mention in every market reversal and correction since 1929.
Which was the lesson people promptly forgot when the markets started rising again, and singing their seductive siren song of effortless wealth and "passive" income.
I admire how you succinctly get to the pertinent information and sum everything up in concise, understandable ways, Peter.
So, “The more the Fed shrinks the money supply and shrinks its balance sheet, the further asset prices—stock prices—are going to trend down.” Is it inevitable that the Fed WILL shrink the money supply? If doing so results in a 58% drop in the Dow, will there be some counteracting force that says, sorry, allowing the Dow to fall that much is unthinkable, so we’ll take ANY other consequences. I don’t know what happens in that scenario…
This is the same Jay Powell who, two years later, blew up the money supply and powered the Dow to fresh record highs.
Right now, the Fed is looking for ways to shrink the money supply and shrink the Fed's balance sheet. As long as that policy trajectory is maintained the Dow is heading down.
However, Jay Powell is sufficiently limp-wristed that he is just as likely next month to decide we need to expand the money supply.
But, that's why I say Wall Street is not in control of its own destiny. The hedge funds are completely dependent on whatever Jay Powell does next, and Jay Powell has no idea what he's going to do next. That's not a good situation for investors to be in.
I laughed out loud at your “endless dithering” remark, Peter. And then I felt the pang of despair at being on the Titanic headed for an iceberg, and there’s nothing that I can personally do to stop the crash.
I’ve been convinced that the stock markets are overvalued for several years, and have been expecting a severe correction. I’m amazed it hasn’t happened by now. As you say, what goes up must come down - we just can’t predict the timing, as the Authorities seem to have a toolbox that allows them to delay consequences.
Here’s what I’m hoping (although I do so with compassion for the Chinese people): the uncorrectable economic situation in China - and in other parts of the world - gives the U.S. pathways to our own economic salvation. I don’t know how it would unfold, but in the race to the bottom, I see the U.S. being bounced upward as others tank - probably at their expense. Peter, as you analyze the Chinese situation in coming months, perhaps you could watch for novel ways that the Trump administration could create new prosperity AS A RESULT of China’s troubles. I suspect that Navarro and his team are doing so, and I think you are even more insightful than they are. This would be fascinating!
Could someone please tell people how 401Ks work? Allthat money you thought you had? You get that only if you sell off the funds. Stock markets go up and down. Maybe you should look at how you are invested. And finally, even with a decrease, if inflation is under control, that money will go farther.
"Paper" wealth is not actual wealth at all.
Which was the lesson people learned in 2001 and in 2008, not to mention in every market reversal and correction since 1929.
Which was the lesson people promptly forgot when the markets started rising again, and singing their seductive siren song of effortless wealth and "passive" income.
"Consequences rarely are."
And we have some helluva consequences.
I admire how you succinctly get to the pertinent information and sum everything up in concise, understandable ways, Peter.
So, “The more the Fed shrinks the money supply and shrinks its balance sheet, the further asset prices—stock prices—are going to trend down.” Is it inevitable that the Fed WILL shrink the money supply? If doing so results in a 58% drop in the Dow, will there be some counteracting force that says, sorry, allowing the Dow to fall that much is unthinkable, so we’ll take ANY other consequences. I don’t know what happens in that scenario…
There is nothing "inevitable" about the Fed except its capacity for endless dithering, especially under Jay Powell.
Jay Powell is the same Fed chair who wanted to bring down the Dow in the 4th quarter of 2018 because he felt stocks were "overvalued"
https://newsletter.allfactsmatter.us/p/the-federal-reserves-christmas-gift
This is the same Jay Powell who, two years later, blew up the money supply and powered the Dow to fresh record highs.
Right now, the Fed is looking for ways to shrink the money supply and shrink the Fed's balance sheet. As long as that policy trajectory is maintained the Dow is heading down.
However, Jay Powell is sufficiently limp-wristed that he is just as likely next month to decide we need to expand the money supply.
But, that's why I say Wall Street is not in control of its own destiny. The hedge funds are completely dependent on whatever Jay Powell does next, and Jay Powell has no idea what he's going to do next. That's not a good situation for investors to be in.
I laughed out loud at your “endless dithering” remark, Peter. And then I felt the pang of despair at being on the Titanic headed for an iceberg, and there’s nothing that I can personally do to stop the crash.
I’ve been convinced that the stock markets are overvalued for several years, and have been expecting a severe correction. I’m amazed it hasn’t happened by now. As you say, what goes up must come down - we just can’t predict the timing, as the Authorities seem to have a toolbox that allows them to delay consequences.
Here’s what I’m hoping (although I do so with compassion for the Chinese people): the uncorrectable economic situation in China - and in other parts of the world - gives the U.S. pathways to our own economic salvation. I don’t know how it would unfold, but in the race to the bottom, I see the U.S. being bounced upward as others tank - probably at their expense. Peter, as you analyze the Chinese situation in coming months, perhaps you could watch for novel ways that the Trump administration could create new prosperity AS A RESULT of China’s troubles. I suspect that Navarro and his team are doing so, and I think you are even more insightful than they are. This would be fascinating!